## Monetary Grants Relating to Non-Depreciable Fixed Assets
Non-depreciable assets — primarily freehold land — are not amortised. The grant benefit cannot be spread through reduced depreciation. Special rules apply.
---
### Option 1: Reduce Grant from Cost of Asset
Deduct the grant directly from the asset's cost.
Journal Entries:
```
Purchase:
Land A/c Dr [full cost]
To Bank [full cost]
Grant:
Bank A/c Dr [grant]
To Land A/c [grant]
```
Net value of Land = Cost − Grant
No depreciation is charged (land is non-depreciable).
---
### Option 2: Do NOT Reduce Grant from Cost
If the company prefers not to reduce the grant from asset cost, the treatment depends on whether the grant is conditional.
#### Sub-case A: Grant is Unconditional
No conditions need to be fulfilled (or all conditions already satisfied).
Treatment: Treat as a Promoter's Contribution → Credit to Capital Reserve
```
Bank/CIB A/c Dr [grant]
To Capital Reserve [grant]
```
#### Sub-case B: Grant is Conditional
Conditions remain outstanding (e.g., "cannot sell the land for 5 years").
Treatment: Credit to Deferred Government Grant (DGG)
```
Bank/CIB A/c Dr [grant]
To DGG A/c [grant]
```
Transfer from DGG to Capital Reserve once conditions are fully met.
---
### Decision Tree
```
Grant for Non-Depreciable Asset
↓
Reduce from cost?
YES → Deduct from Land A/c
NO → Unconditional?
YES → Capital Reserve
NO → DGG (transfer to Cap Reserve when conditions met)
```